India’s leading retailers have considerably decelerated their store expansion in the current fiscal year. According to their latest investor disclosures, the top five retail chains—Reliance Retail, Titan Company, Avenue Supermarts (owner of DMart), V-Mart Retail, and Shoppers Stop—have collectively opened 44% fewer stores in the first three quarters through December compared to the same period last year. This slowdown follows a record number of outlets opened by these retailers in the previous year.
During the period between April and December, Reliance Retail inaugurated 1,276 new stores, a significant decrease from the 2,376 stores opened in the corresponding period the previous year. Titan Company, owned by Tata, launched 239 outlets encompassing various brands, including Tanishq jewellery stores, a decline from the 359 stores opened in the same period last year. Avenue Supermarts, on the other hand, introduced 17 new DMart stores, down from 22 stores the previous year.
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V-Mart and Shoppers Stop expanded their store presence compared to the first nine months of the previous fiscal year. V-Mart’s new store count increased from 42 to 46; however, considering closures of underperforming outlets, the net addition dropped to 31 from 34. Shoppers Stop has not disclosed its net count, as it hasn’t reported the number of stores it closed. Additionally, the retailer operates in the bridge-to-luxury and premium segment, which is less affected by shifts in consumption patterns.
According to top industry executives, the slowdown in store expansion can be attributed to a heightened focus on profitability. This shift occurred as consumption failed to reach the expected levels, and most new markets are already saturated with 2-4 retailers, leaving minimal room for additional outlets.
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Lalit Agarwal, the Managing Director of V-Mart, said that until the last fiscal year, numerous untapped markets remained available. However, the scope for exploration has diminished as many retailers have undertaken significant expansion efforts.
“There is also a mindset change in the expansion strategy where the focus is now on profitability since overall consumption has not picked up. The rural and mass segment has improved year-on-year, but we are yet to return to the original consumption levels,” he said. “Hence, expansion has become muted for the industry this fiscal.”
Moreover, the expansion during the previous fiscal year was influenced by pent-up factors, as store additions during the peak of the Covid period (FY21 and FY22) were hampered by restrictions on offline store operating hours. According to a recent report from Jefferies, Reliance Retail has curtailed its retail business capital expenditure, and it is expected to remain moderate. The report highlighted that the peak investments in supply chain and digital infrastructure have already been made, and the pace of store additions has decreased. In the last quarter, Reliance Retail’s net store addition stood at 124, marking the lowest figure in five years, excluding the quarters affected by the Covid pandemic.
